Your Take on the NE IL Housing Market

4 Replies

Hello, Folks,

I'm looking for other folks' takes on the housing market in the suburban and Metro Chicago areas.

For example, ...

Rehabs and Fix-and-flips: 

When you went to sell, how was your time-on-market compared to what you expected? 

Did you need to be flexible or did prospective buyers bid you up above your asking price?

What kinds of properties did have success selling? (beds / baths / sq ft, etc.)

New Construction:

What are buyers looking for in new construction from your experience? (single / multi-story, amenities, sq ft, beds, baths, basements, garages, etc.)

How is the market for new construction from your experience? What areas was that in?

From my own observations in Kendall and Will Counties, I am seeing some housing starts, but certainly not like the run up to the crash. Most of the new homes I'm seeing are two-story, 3 and four bedroom, 2 to 3 bath with usually one half-bath on the main floor, full basements, 2 car attached garages.

The market for more modest homes seems a bit slow due to the on-going employment and lending issues in the area.

Rentals seem to not be empty very long at all, certainly, presumably for similar reasons: employment is soft and lending is a bit dear.

Hoping you'll share your experiences. Looking to learn from everyone.

Originally posted by @David Dachtera :

Hello, Folks,

I'm looking for other folks' takes on the housing market in the suburban and Metro Chicago areas.

For example, ...

Rehabs and Fix-and-flips: 

When you went to sell, how was your time-on-market compared to what you expected? 

Did you need to be flexible or did prospective buyers bid you up above your asking price?

What kinds of properties did have success selling? (beds / baths / sq ft, etc.)

My experience with rehabs/flips last 6 months in Cook County

South Surburbs; 3+bedrooms/2+baths/1500+sq ft/ Brick/ 2 car garage/ Basements- Average Market Time- 25 days/ Paid 97% of Listing price; Covered 3% of Buyers closing cost on average.

Thanks @Neil Henderson !

Hello @David Dachtera . Here is what we are seeing:

1. Days on market and variance between list and sale price are increasing.

2. Retails buyers are weary and are not entering into bidding wars. On the other hand, investors are having a hard time getting a hold of inventory and are compressing their margins to compete with new "investors" that are coming out of all the real estate education programs.

3. The bread and butter 3 bedroom 2 baths are still moving, specially in the lower tier price ranges. Luxury homes are getting hammered.

4. On the new construction front, there are a lot of build-to-rent deals because of cheap money but many of the power builders for retail buyers are slowing down due to increase in material costs, softening of the market, and lack of quality labor.

This is my assessment of the Metro Chicagoland Area. We have stopped flipping properties and are selling all of our rental portfolio to trade up into self-storage which historically has performed well in recessions. We are also moving towards a larger cash position in order to weather the coming storm.

I do not think a "bubble" is coming from the mortgage or property sector this time but from the $1.6 trillion dollars in government backed student debt which is already up to a 15% default rate. In a gig economy, many of the students outside the STEM and a few other fields are having trouble paying for their $80,000+ student loans which is dropping credit scores, creating difficulties in rental applications being approved, and delaying house-hold formation which in turn causes consumer spending and consumer confidence to drop heavily. The U.S. government is relying on those debt payments as well as the consumer spending to unwind their books from the last few rounds of QE in addition to the supposed inflation that was to occur after such QE which never came. The amount of debt as a ratio to GDP is in dangerous territory where now there is a negative effect of government spending on return because the interest paid on such debt is at a critical threshold.

At best I think we are going into 10-30 years of stagnation as was seen with the "lost decade" in Japan. At worst there is a black swan event due to the hyper-connectivity and systemic risk that is present in our financial industry due to the consolidation of the too big to fail banks which could lead to a Cypress-Greece style credit freeze and liquidity crisis.

I hope I am wrong but I am hedging my portfolio in the chance I am right.


@Fernando Angelucci ,

Hey! Thank you so much for responding!

I'm going to share your reply with my colleagues off of BP, if that's o.k. with you. Lot's of good insights here, and I'd like to get their feedback.

As much as I can, I'll relay their responses ...